Germany pays lip service to free trade

Source:Global Times Published: 2018/1/30 23:08:41

Germany has initiated EU legislation with France and Italy to strengthen monitoring of foreign direct investment in the EU. The draft law is widely regarded as targeting China. Matthias Machnig, state secretary in Germany's economics ministry, reportedly said that it was urgent to police surging Chinese investment.

Even the German media admitted the initiative is an act of trade protectionism. Interestingly, German Chancellor Angela Merkel and French President Emmanuel Macron had just harshly criticized trade protectionism at the World Economic Forum in Davos.

Merkel's warning that "protectionism is not the answer" to world problems, seen as directed at US President Donald Trump, was warmly received at the summit. While self-righteously criticizing Trump, Germany meanwhile is considering tightening its monitoring of Chinese investments. This will inevitably harm Germany and Europe's image, damaging a reputation for free trade they have been endeavoring to uphold.

China's investment in Europe rose rapidly since 2015, but fell in 2017. Chinese investment is new and quite small. It is impossible for China to buy Europe's technological advantages by means of acquisition. The truth is that Europe will not sell its high-tech companies. It is usually those with operational difficulties that are sold to China, which brings mutual benefits given China's comparative capital and market advantages.

Some Europeans view Chinese investors as treasure hunters. Such a conjecture, despite its popularity, cannot withstand deliberation. Mutual benefits and joint development is the logic of the market. Chinese investment has brought Europe jobs, revenues, capital and new market.

Europe holds diverse attitudes toward China's investment. While Central and Eastern Europe welcomes it, Western European countries, especially Germany, are increasingly jittery and vigilant. But there are different voices even in Germany. Companies acquired by China are grateful for the investment, but their voices have been overwhelmed by the "China threat" hyped by scholars, media outlets and politicians with ulterior motives. Europe shouldn't be held hostage to the interests and prejudices of a minority.

Europe needs to adjust its mentality and become more inclusive. Europe enjoyed asymmetric foreign trade in the past, attaching more importance to exporting than importing. Chinese enterprises have become stronger and their entry into Europe has raised some European anxieties.

Selfish and close-minded, these Europeans want to keep "Made in China" products pegged down the industrial chain and retain their grasp of the upper reaches. Such a mind-set has deficiencies. Europe will not succeed in suppressing the inevitable upgrade of Chinese manufacturing. The advancement of China's manufacturing industry will bring more cooperation. For instance, China's high-speed railway has revived many German and Japanese companies.

Both China and Europe should handle their relations from a strategic perspective, expand cooperation and put conflicts under control. China should voice its opposition and negotiate with Europe on the bill so as to reduce its impact.

The bill is against the will of the European people. Certain forces in Western Europe want to disseminate their China fear to the whole EU, but they will not succeed.

Posted in: EDITORIAL

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